There has been substantial debate and some confusion over how you identify when a restriction is a restriction ‘by object’ or ‘by effect’ under Article 101 and 102 TFEU. This debate follows on from the Commission’s recently publishing a revised De Minimis notice and certain policy papers in June 2014 and the recent European Court of justice case in Groupement Des Cartes Bancaires (“GCB case”). We reported on the De Minimis notice and a list of restrictions ‘by object’ in this post.
So why is this debate important?
Restrictions by object are so serious that by their very nature they are anti-competitive and do not require further analysis by competition authorities to prove an infringement of competition law. On the other hand, restrictions by effect are not always infringements of competition law and need detailed analysis of their effects on the market to ascertain whether they constitute infringements of Article 101 & 102 .
The Commission has been criticised in recent years for progressively extending its interpretation of when restrictions fall into the “by object category” so it can find companies guilty of competition law infringements without undertaking a detailed analysis on the effect of the restriction on the market. The European Court of Justice sought to draw a line under this practice in its recent judgment in the GCB case.
The EU Director-General for Competition (DG), Alexander Italianer, added his voice to this debate in a speech on 10th December 2014. In it he addressed the relationship between restrictions by object and restrictions by effect under Articles 101 and 102 TFEU and offered some guidance as how identify the different types of restriction. He also addressed the criticism of the Commission’s methodology of too readily categorising cases as restrictions by object.
He drew on remarks of AG Kokott in the 2009 case of Case C-8/808 T Mobile Netherlands ( AG Kokott’s opinion) in comparing restrictions by object to drunk driving. He stated:
“Drunk driving is always illegal, because all our experience tells us that it is extremely likely to cause harm. The risk of harm is sufficiently great to warrant an outright prohibition, rather than judging infringements on a case by case analysis.”
However, he emphasises that whilst the above analogy is helpful as a way of categorising “by object” clauses, it is not the whole story. He highlights that restrictions by object, notwithstanding their serious nature, cannot ever be “per se” infringements of the competition rules as they are sometimes portrayed – rather akin to per se infringements of US antitrust law. Such clauses are however subject to an efficiency defence under both Article 101(3) as an individual exemption or as an objective justification under Article 102.
Anyone wishing to explain what the difference is between competitive restrictions by object and effect would do well to remember the above quote, subject to the efficiency defence.
The full speech and its discussion of the case law can be found here.